Fewer planning approvals for home due to lack of development funding
Planning approvals for new homes have fallen for the first time since 2011 with research suggesting that Brexit uncertainty is restricting finance available to developers.
Overall there was a 4% fall in planning approvals in 2018 for new housing developments, according to the research from easyMoney, which says that developers need lending to spur on new housing starts.
This was a three year low with the number of residential planning approvals reaching 47,500 last year from 49,600 in 2017.
The firm believes that one of the main drivers behind the drop-off in the number of planning approvals for new homes is Brexit-related uncertainty and that this is leading to banks reducing their lending to property developers even further, forcing them to postpone new developments.
Further analysis of Bank of England data shows that the value of outstanding bank lending to property development businesses fell to just £14.5 billion in November 2018, down from a peak of £35.9 billion in November 2013.
It says that the decrease in planning approvals should concern the UK Government, which is under pressure to build more homes and has pledged to reach 300,000 a year in England by the mid 2020s.
‘Britain desperately needs new homes but developers don’t have the financial firepower to make it happen. Until Brexit is sorted and some certainty is provided, the funding from mainstream lenders required to get projects going is unlikely to start flowing,’ said Andrew de Candole, easyMoney chief executive officer.
‘Developers have the land and the demand for homes is there, but the increasing lack of support from lenders is making it difficult to get projects moving,’ he added.